October 25 (Reuters) – Shares of the blank check acquiring company that plans to publicly list former US President Donald Trump’s new social media venture fell on Monday after a mind-boggling rally last week, so that a short seller said he was betting against the company.
Miami-based Special Purpose Acquisition (SPAC) Digital World Acquisition (DWAC.O) fell 10.98%, its first session down since Wednesday’s announcement of its merger with the media company of Trump to create a social media app called TRUTH Social. Read more
The stock surged after the announcement and remains up more than 700% since the deal was unveiled.
Earlier Monday, short seller Iceberg Research tweeted he was betting against the company’s shares.
“We are running out of $ DWAC. Now that the initial excitement has passed, we only see risks for investors for the foreseeable future. Based on Trump’s track record, at the current price, renegotiation is likely to keep more of the merged company to himself, ”Iceberg Research tweeted.
Iceberg, who posts a blog with his research on WordPress, gained attention in 2015 for highlighting what he called aggressive accounting practices at Hong Kong-based commodities trader Noble Group. Noble denied the allegations, but then saw his profits plummet and was forced to sell most of his assets.
The company said earlier this year that it was a stock of popular AMC Entertainment Holdings (AMC.N) meme. Read more
The recent wave of Digital World Acquisition is reminiscent of the meme market frenzy earlier in 2021, when an army of retail investors on Reddit fueled hyper-rallies in GameStop Corp (GME.N), AMC Entertainment Holdings and others. actions.
Twitter (TWTR.N), Facebook (FB.O) and other social media platforms banned Trump from their services after hundreds of his supporters rioted on the U.S. Capitol on Jan.6.
TRUTH Social is slated for a beta launch next month and full deployment in Q1 2022.
SPACs allow private companies to publicly list their shares while avoiding traditional initial public offerings.
Reporting by Noel Randewich; Editing by Ira Iosebashvili and Chris Reese
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